Perkiomen Valley School Board may drop $15 per capita tax

PERKIOMEN — The agenda for the Perkiomen Valley School Board’s Feb. 11 meeting will include a vote on tax collector compensation, but it may turn out that the district will wind up eliminating its per capita tax.

At its Jan. 14 business meeting, the board had discussed a motion to keep tax collector compensation at its present level of $3.12 per real estate tax bill, but to reduce it by $1, to $2.12, for each per capita tax bill. The motion had been tabled in an 8-1 vote, following a discussion about the possible financial impact of doing away with the per capita tax. Another topic that had been touched upon was the additional work created for the tax collectors by allowing residents to pay real estate taxes in installments.

District Business Administrator Jim Weaver presented the board with a proposal Monday to pay the tax collectors $3.12 for each real estate tax bill, plus $1 for each installment collected. According to Weaver, less than 6 percent of taxpayers chose the installment option.

The figures presented by Weaver indicated that, for 2012-13, there were 12,532 real estate tax bills in the district, generating a total of $39,099 in compensation to tax collectors. At the 6-percent rate of participation in the installment payment option, Weaver calculated that tax collectors would receive an additional $1,504, which, with Social Security taxes taken into consideration, would mean that the district’s total cost of collection would be $43,710.

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At one point during the meeting, Weaver explained that the $15 per capita tax, also referred to as a “head tax,” is levied on everyone in the district over the age of 18, not a student or in the military, disabled, or earning less than $12,000.

A handout that Weaver referred to showed that per capita tax collections in the district totaled $255,666 in 2011-12. Of that amount, $110,777 went for costs, including $72,009 for tax collector compensation, as well as other expenses such as postage, printing and software. Thus, the net amount collected was $144,888.

Weaver said he did not have a recommendation concerning compensation for collection of per capita taxes. However, he pointed out that the total revenue collected from the occupational assessment, earned income and per capita taxes was expected to be $1.4 million, or about 14.81 percent, higher in 2013-14 than it had been in 2009-10. Weaver noted that the budget being prepared for the coming year assumed that $10.6 million would be generated by the earned income tax, which replaced the district’s occupational assessment tax a number of years ago.

Board member Gerry Barnefiher asked if might be possible to make a decision about the elimination of the per capita tax in a couple of years. Solicitor Brian Subers replied that, because of its correlation to tax collector compensation, any such move would have to be taken by Feb. 14.

“It’s cart before the horse time,” said Barnefiher, pointing out that the district’s 2013-14 budget numbers had not been finalized. Barnefiher added that he was not comfortable with the elimination of the per capita tax until a track record had been established for the earned income tax.

“I agree with Jerry,” said board member Ann Mantey, who had cast the sole vote against tabling the motion on tax collector compensation at the Jan. 14 meeting.

Board Vice President Lynn Bigelow said the district had been required by the state to give the option for installment payments of the real estate tax, without being provided any money to cover the additional costs.

“This is another example of an unfunded mandate,” he added.

Bigelow went on to say that he was “in favor of removing the per capita tax.” He maintained that the district was earning so much from the earned income tax that it could do away with the head tax.

Board member Paul Smith pointed out that, if the per capita tax were eliminated, the $144,888 in net collections would have to be made up through the real estate tax. He asked what the resulting burden for each taxpayer would be.

Weaver said that divvying up the net revenue from the per capita tax among the 12,532 parcels in the district would result in an $11.57 cost to each taxpayer. Smith commented that the property owner would come out ahead compared to the cost of the per capita tax, so he expressed support for its elimination.

Barnefiher, however, pointed out that there had been swings in the earned income tax. While the per capita tax was not perfect, he said, it was revenue “on the table.”

Looking at the ratio between the district’s collection costs and revenue from the per capita tax, board President Lori Snyder said it was not an efficient way to raise money. She pointed out that about one-third of what the district received through the tax went to pay for tax collector compensation.

Some discussion followed about the mechanics for what motions would be brought before the board at the upcoming business meeting.

Board member John King said he did not want a motion on tax collector compensation for the per capita tax to be on the consent agenda, in which action on a number of items is taken in one vote. Fellow board member Randy Bennett suggested that a motion on approval of tax collector compensation for the capita tax could be introduced and then, if that were voted down or amended, the board could move to act on eliminating the head tax.